PPB recollected questions on 06.12.2020

  06.12.2020

SMA-0 Principal or interest payment not overdue for more than 30 days but account showing signs of incipient stress

SMA-1 Principal or interest payment overdue between 31-60 days

SMA-2 Principal or interest payment overdue between 61-90 days

Governor of the Reserve Bank of India – Chairperson, ex officio; (Shri Shaktikanta Das) of MPC

5 Mark's question are easy just odd one out you can manage them easily

Many questions on ethics and professionalism

One question was there on there on LC financing

Call money

Locker nomination

CRR

Conflict of interest

Penetration marketing

Minor do not want to be a partner

Basel 2 and 3,

Marketing mix,

case studies on nomination in locker accounts,

LANS,

business value,

Ethical dilemma,

pledge,

hypo, .

mortgage and assignment match the following,

numerical on NPA provision for doubtful assets.

Priority sector advances to weaker sections,

updated investment and turnover for micro industries,

diversification,

MKIS

customer banker relationship

question regarding SWITF

PMJDY

PMAPY

PMJJBY

PMSBY

Fair practice of lending

Non popular social networking site

Code of conduct for Direct Sales Agent made by?

Valuation of Mutual fund on...

Pre shipment credit

FCNR(B) is ___ form of term deposit

Data mining tools

Frauds committed by large number of customers

Call money market

Minor who doesn't want to be in partnership should do...

Business facilitator work on behalf of...

Ethical Dilemma

Increase in CRR...

type of mergers

Locker operation related

current ratio compare

Liberalized Remittance scheme related

marketing 15 question

ethics 15 questions

Cash management services related

Mutual fund scheme

NPA- D1, D2 related questions

Provisioning numerical

Priority sector related

Identify weaker section

Endorsement case study

Banking regulation act ke question

Rangarajan Committee

Narasimham committee

Classification of Assets 

Computerization in Banks 

Priority Sector – Target 

Money Market 

Marketing Ethics 

Match the Following – Vehicle, LIC Policy, Land, Hypothecation, Pledge Etc 

Provision of Doubtful Assets 

Banking Regulation ACT 

NPA 

General Banking – Either or Survivor 

MSME 

TNW 

Current Ratio 

SWIFT – related working DAYS 

CRILC – who developed (Ans: RBI) 

REPO RATE – Definition 

MICRO/SMALL /MEDIUM 

ISO Standards for smart cards – ISO 7816

ATM 

Weaker sections in PSL 

PMJJBY 

Mortgage 

MCLR 

PRODUCT MIX 

Ex-Officio chairman of MPC (Ans: RBI Governor)

Penalty of non-maintenance of CRR 

Debt Market 

Marketing & Product Development 

Product Life Cycle Stages 

NRLM Objective 

Letter of Credit 

Commercial Paper 

MKIS(Marketing Information System)

 Rangarajan Committee

Narasimham committee

Classification of Assets 

Computerization in Banks 

Priority Sector – Target 

Money Market 

Marketing Ethics 

Match the Following – Vehicle, LIC Policy, Land, Hypothecation, Pledge Etc 

Provision of Doubtful Assets 

Banking Regulation ACT 

NPA 

General Banking – Either or Survivor 

MSME 

TNW 

Current Ratio 

SWIFT – related working DAYS 

CRILC – who developed (Ans: RBI) 

REPO RATE – Definition 

MICRO/SMALL /MEDIUM 

ISO Standards for smart cards – ISO 7816

ATM 

Weaker sections in PSL 

PMJJBY 

Mortgage 

MCLR 

PRODUCT MIX 

Ex-Officio chairman of MPC (Ans: RBI Governor)

Penalty of non-maintenance of CRR 

Debt Market 

Marketing & Product Development 

Product Life Cycle Stages 

NRLM Objective 

Letter of Credit 

Commercial Paper

Business value

Ethical dilemma

Pledge, hypo, mortgage and assignment match the following

Numerical on NPA provision for doubtful assets

Priority sector advances to weaker sections

Updated investment and turnover for micro industries

Diversification

MKIS

Basel 2 and 3

Marketing Mix

Case studies on nomination in locker accounts

LAN

Questions on cheque conversion

call money market

PMJDY

Fair practice of lending

Non popular social networking site

Code of conduct for Direct Sales Agent made by?

Valuation of Mutual fund on…

Pre shipment credit

FCNR(B) is _ form of term deposit

Data mining tools

Frauds committed by large number of customers\

Call money market

Minor who doesn’t want to be in partnership should do…

Business facilitator work on behalf of…

Ethical Dilemma

Increase in CRR…

PMAPY

PMJJBY

PMSBY

Banking definition

Accept deposit purpose

Bank interest rates in marketing

Which one is not mkis

gross advance

Net working capital

Weaker section categories

Fair practice of lender 2 to 3 questions

mutual fund related 1

Rangarajan Committee

Narasimham committee

Classification of Assets

Computerization in Banks

Priority Sector – Target

Computerization in Banks

Priority Sector – Target

Money Market

Marketing Ethics

Match the Following – Vehicle, LIC Policy, Land, Hypothecation, Pledge Etc

Provision of Doubtful Assets

Banking Regulation ACT

NPA

General Banking – Either or Survivor

MSME

TNW

Current Ratio

SWIFT – related working DAYS

CRILC – who developed (Ans: RBI)

REPO RATE – Definition

MICRO/SMALL /MEDIUM

ISO Standards for smart cards – ISO 7816

ATM

Weaker sections in PSL

Mortgage

MCLR

PRODUCT MIX

Ex-Officio chairman of MPC (Ans: RBI Governor)

Penalty of non-maintenance of CRR

Debt Market

Marketing & Product Development

Product Life Cycle Stages

NRLM Objective

Letter of Credit

Marketing Ethics

Match the Following – Vehicle, LIC Policy, Land, Hypothecation, Pledge Etc

Provision of Doubtful Assets

Banking Regulation ACT

NPA

General Banking – Either or Survivor

MSME

TNW

Current Ratio

SWIFT – related working DAYS

CRILC – who developed (Ans: RBI)

REPO RATE – Definition

MICRO/SMALL /MEDIUM

ISO Standards for smart cards – ISO 7816

ATM

Mortgage

MCLR

Marketing & Product Development

Product Life Cycle Stages

NRLM Objective

Letter of Credit

Commercial Paper

MKIS(Marketing Information System)

All IIBF 2022 Certifications ,JAIIB ,CAIIB PDFs in single link

 All IIBF Certifications PDFs in single link

Be safe ,stay safe during this covid pandemic

Read corresponding  IIBF book 1st Macmillan / Taxmann.

These all materials are extra information to get knowledge.

All the best

IIBFADDA4U:

https://iibfadda4u.blogspot.com/?m=1

Certified credit officer/Professionals
https://drive.google.com/file/d/1noDBuJjOoNhbJYO5ghbNdI_1-lbBEpH8/view?usp=sharing


MSME
https://drive.google.com/file/d/1i4H8NgpjCtlEefnPW1KTIKDj9BWdHLcg/view?usp=sharing

KYC AML:
https://drive.google.com/file/d/1ooohD2A7OO8UaO2WjUBLyRd1aD_Yco6s/view?usp=sharing

BCSBI
https://drive.google.com/file/d/1IN4SVWdxCCMZ9nRvSUwbI4O0kCGGKCic/view?usp=sharing

CAIIB ABM
https://drive.google.com/file/d/1XsZMX4Xfonqp_CVWz-PtfEZ6TxDEYb-n/view?usp=sharing

CAIIB IT
https://drive.google.com/file/d/1UO2x6ZP7jDmS2Q3GXEhoO1_NyNYgWT-d/view?usp=sharing

Certified Treasury Professionals:
https://drive.google.com/file/d/1T-P1FwMLVjsJRvuLybZnssvRqFt1D5E4/view?usp=sharing

Digital banking
https://drive.google.com/file/d/1dNOf3cwC9oHkrGyBozvmGZOmbXLZjV55/view?usp=sharing

Forex Individual
https://drive.google.com/file/d/1R6VPUzjNyiSGpf2f3aCAJZEPiY7fwOCW/view?usp=sharing

Forex Operations
https://drive.google.com/file/d/1h54CyU7wN14T2M4wHNZCNGDzrihHYUeE/view?usp=sharing

Cyber Crime and fraud management
https://drive.google.com/file/d/1EBffHoxmW8rNmG5Q-peY2wn5QNlH0Lot/view?usp=sharing

Information System for Bankers
https://drive.google.com/file/d/1s3Jw0dSxu3dAfqXheSUv2n9tB3NV7HvH/view?usp=sharing

By Mr Aravind

https://drive.google.com/file/d/1NL_dNgrCYpsIGRRA9RsQc9bSV78EDX9w/view?usp=drivesdk


International Trade Finance
https://drive.google.com/file/d/1RSCeLuPD7Vkm7w9qiFfgs7yLH4Jz2xIJ/view?usp=sharing

IT SECURITY
https://drive.google.com/file/d/1PBBkirwJ3a4WCfvnU5cOPe8xIQTOAqGi/view?usp=sharing

Microfinance
https://drive.google.com/file/d/1JlBWepV73qPvP4Ni-UK0si1zdDbm80Ow/view?usp=sharing

Risk In financial services
https://drive.google.com/file/d/1zyLXzj7u0B3nDhProgBHJENLIcUmfbG9/view?usp=sharing

Certified Audit  Professionals:
https://drive.google.com/file/d/1hoF4w_jgChsbgMDmC3Xq7d5RLvDIo5m-/view?usp=sharing

ALL JAIIB Materials:

https://drive.google.com/drive/folders/1JdUsNs1R61rXVjvXzd8EwM6vhl42RSmX?usp=sharing

ALL CAIIB Materials:

https://drive.google.com/drive/folders/1gx-kZHxPj9mjOZ6dImkwY6UA6MafI2X0?usp=sharing

Regular Study - Accounting & Finance for Bankers

 

Regular Study - Basic Accounting Terms
The understanding of the subject becomes easy when one has the knowledge of a few
important terms of accounting. Let us go through some of them.
Transactions
Transactions are those activities of a business, which involve transfer of money or goods or
services between two persons or two accounts. For example, purchase of goods, sale of
goods, borrowing from bank, lending of money, salaries paid, rent paid, commission
received and dividend received. Transactions are of two types, namely, cash and credit
transactions.
Cash Transaction is one where cash receipt or payment is involved in the transaction. For
example, When You buys goods from a seller paying the price of goods by cash
immediately, it is a cash transaction.
Credit Transaction is one where cash is not involved immediately but will be paid or
received later. In the above example, if You, do not pay cash immediately but promises to
pay later, it is credit transaction.
Proprietor
A person who owns a business is called its proprietor. He contributes capital to the business
with the intention of earning profit.
Capital
It is the amount invested by the proprietor/s in the business. This amount is increased by the
amount of profits earned and the amount of additional capital introduced. It is decreased by
the amount of losses incurred and the amounts withdrawn. For example, if Mr. Ram starts
business with Rs.10,00,000, his capital would be Rs.10,00,000.
Assets
Assets are the properties of every description belonging to the business. Cash in hand, plant
and machinery, furniture and fittings, bank balance, debtors, bills receivable, stock of
goods, investments, Goodwill are examples for assets. Assets can be classified into tangible
and intangible.
Tangible Assets: These assets are those having physical existence. It can be seen and
touched. For example, plant & machinery, cash, etc.
Intangible Assets: Intangible assets are those assets having no physical existence but their
possession gives rise to some rights and benefits to the owner. It cannot be seen and
touched. Goodwill, patents, trademarks are some of the examples.
Liabilities
Liabilities refer to the financial obligations of a business. These denote the amounts which a
business owes to others, e.g., loans from banks or other persons, creditors for goods
supplied, bills payable, outstanding expenses, bank overdraft etc.
Drawings
It is the amount of cash or value of goods withdrawn from the business by the proprietor for
his personal use. It is deducted from the capital.
Debtors
A person (individual or firm) who receives a benefit without giving money or money’s
worth immediately, but liable to pay in future or in due course of time is a debtor. The
debtors are shown as an asset in the balance sheet. For example, Mr. Ravi bought goods on
credit from Mr. Ram for Rs.10,000. Mr. Ravi is a debtor to Mr. Ram till he pays the value
of the goods.
Creditors
A person who gives a benefit without receiving money or money’s worth immediately but
to claim in future, is a creditor. The creditors are shown as a liability in the balance sheet. In
the above example Mr. Ram is a creditor to Mr. Ravi till he receive the value of the goods.
Purchases
Purchases refers to the amount of goods bought by a business for resale or for use in the
production. Goods purchased for cash are called cash purchases. If it is purchased on
credit, it is called as credit purchases. Total purchases include both cash and credit
purchases.
Purchases Return or Returns Outward
When goods are returned to the suppliers due to defective quality or not as per the terms of
purchase, it is called as purchases return. To find net purchases, purchases return is
deducted from the total purchases.
Sales
Sales refers to the amount of goods sold that are already bought or manufactured by the
business. When goods are sold for cash, they are cash sales but if goods are sold and
payment is not received at the time of sale, it is credit sales. Total sales includes both cash
and credit sales.
Sales Return or Returns Inward
When goods are returned from the customers due to defective quality or not as per the terms
of sale, it is called sales return or returns inward. To find out net sales, sales return is
deducted from total sales.
Stock
Stock includes goods unsold on a particular date. Stock may be opening and closing stock.
The term opening stock means goods unsold in the beginning of the accounting period.
Whereas the term closing stock includes goods unsold at the end of the accounting period.
For example, if 5,000 units purchased @ Rs. 30 per unit remain unsold, the closing stock is
Rs. 1,50,000. This will be opening stock of the subsequent year.
Revenue
Revenue means the amount receivable or realised from sale of goods and earnings from
interest, dividend, commission, etc.
Expense
It is the amount spent in order to produce and sell the goods and services. For example,
purchase of raw materials, payment of salaries, wages, etc.
Income
Income is the difference between revenue and expense.
Voucher
It is a written document in support of a transaction. It is a proof that a particular transaction
has taken place for the value stated in the voucher. It may be in the form of cash receipt,
invoice, cash memo, bank pay-in-slip etc. Voucher is necessary to audit the accounts.
Invoice
Invoice is a business document which is prepared when one sell goods to another. The
statement is prepared by the seller of goods. It contains the information relating to name and
address of the seller and the buyer, the date of sale and the clear description of goods with
quantity and price.
Receipt
Receipt is an acknowledgement for cash received. It is issued to the party paying cash.
Receipts form the basis for entries in cash book.
Account
Account is a summary of relevant business transactions at one place relating to a person,
asset, expense or revenue named in the heading. An account is a brief history of financial
transactions of a particular person or item. An account has two sides called debit side and
credit side.
Regular Study - Classification of Accounts
Classification of Accounts
Transactions can be divided into three categories.
i. Transactions relating to individuals and firms
ii. Transactions relating to properties, goods or cash
iii. Transactions relating to expenses or losses and incomes or gains.
Therefore, accounts can also be classified into Personal, Real and Nominal. The
classification may be illustrated as follows
Personal Accounts:
Accounts recording transactions relating to individuals or firms or company are known as
personal accounts. Personal accounts may further be classified as:
(i) Natural Person’s personal accounts: The accounts recording transactions relating to
individual human beings e.g., Anand’s a/c, Ramesh’s a/c, Pankaj a/c are classified as natural
persons’ personal accounts.
(ii) Artificial Persons’ Personal accounts: The accounts recording transactions relating to
limited companies, bank, firm, institution, club, etc., Delhi Cloth Mill; M/s Sahoo & Sahoo;
Hans Raj College; Gymkhana Club are classified as artificial persons’ personal accounts.
(iii) Representative Personal Accounts: The accounts recording transactions relating to
the expenses and incomes are classified as nominal accounts. But in certain cases (due to
the matching concept of accounting) the amount, on a particular date, is payable to the
individuals or recoverable from individuals. Such amount (i) relates to the particular head of
expenditure or income and (ii) represent persons to whom it is payable or from whom it is
recoverable. Such accounts are classified as representative personal accounts e.g., “wages
outstanding account”, pre-paid Insurance account, etc.
The proprietor being an individual his capital account and his drawings account are
also personal accounts.
Impersonal Accounts
All those accounts which are not personal accounts. This is further divided into two types
viz. Real and Nominal accounts.
i. Real Accounts: Accounts relating to properties and assets which are owned by the
business concern. Real accounts include tangible and intangible accounts. For example,
Land, Building, Goodwill, Purchases, etc.
ii. Nominal Accounts: These accounts do not have any existence, form or shape. They
relate to incomes and expenses and gains and losses of a business concern. For example,
Salary Account, Dividend Account, etc.
Rules of debit and credit (classification based)
1. Personal accounts : Debit the receiver - Credit the giver (supplier)
2. Real accounts : Debit what comes in - Credit what goes out
3. Nominal accounts : Debit expenses and losses - Credit incomes and gains

LIMITATION ASPECTS

 LIMITATION ASPECTS

1. Law of Limitation bars only the right and not the remedy (for eg. right to sell the seized goods,

pledged goods, right of set off etc Can be resorted to in time barred accounts)

2. The number of times the AOD can be obtained from the borrower without getting a fresh set of

documents is No such stipulation

3. Limitation period for applying for final decree Three years (from the date given/expiry of time

given) in the preliminary decree

4. The limitation period in the case of guarantees obtained by the bank from the borrower is:

is not renewed

5. AOD obtained after expiry of pronote - Not valid

6. The Limitation period in the case of a loan backed by mortgage is 12 years from the mortgage

money falling due

7. The Limitation period for enforcement of guarantee is 3 years from the expiry date or demand or

revocation.

8. When different persons have executed the documents on different dates, following date will be

reckoned for computation of limitation The date of first execution.

9. The period of limitation for execution of a decree is 12 years from the date of decree becoming

executable

10.A bill of exchange is discounted to our customer who is the drawer of the bill. The bill is returned

by the collecting banker for the reason ―Payment not forthcoming. The party has not provided funds

for recovering the dues. To save Limitation AOD is to be obtained from the drawer and the drawee.

11. In the case of gold loan, to save limitation for filing suit, we have to obtain: Letter of revival

unstamped.

Limitation period of various documents CCP exam

 Limitation period of various documents CCP exam

Temporary Overdraft without DPN 3 years from date of loan
Demand Loan 3 years from the date of loan
Demand Promissory Note 3 years from date of DPN
Bill of exchange_payable on demand 3 years from date of Bill.
Usance bill of exchange or promissory note 3 years from the due date of the bill or PN •
-Suit for Money_ Decree 3 years from the date right is due
Term Loans payable by instalments 3 years from due date of each instalment . .
Mortgage 12 years from the due date of the loan
Right of foreclosure by the mortgagee 30 years
Right of redemption 30 years
Cash credit against hypothecation or overdraft 3 years from the date of document.
Cash Credit Pledge Not applicable
Any suit by State/Central Government 30 years from the date when limitation would start
Deposit like SB, CA, FD with a bank 3 years from date of demand
Execution of Decree 12 years from the date of decree
Recovery of loss caused by fraud 3 years from the date of detection of fraud
Claim under Consumer Protection Act 2 year from the date light accrues
Dishonour of cheque under sec 138 of NI Act 1 month from the date right accrues
Appeal to High Court against Lower court 90 days from date of decree
Appeal to other courts on the decree at Lower court 30 days from date of decree

JAIIB – AFB (ACCOUNTING & FINANCE FOR BANKERS)

 JAIIB – AFB (ACCOUNTING & FINANCE FOR BANKERS)

You are given a balance sheet of a business firm with following particulars. Work out the
ratios given at the end......
Liabilities 1st yr 2nd yr
Capital 40 40
Reserves 15 20
Debentures 70 60
Other Current Liabilities 18 24
Bank Working Capital Limits 37 36
Total Liabilities 180 180
Assets 1st yr 2nd yr
Fixed Assets 32 33
Advance for fixed assets 5 -
Security Deposits 4 6
Stocks 66 81
Book Debts 49 30
Sundry Debtors 16 24
Preliminary Expenses 8 6
Total Assets 180 180
Sales 312 390
Profits 8 9
Depreciation 3 3
1. The short term sources of funds and short term uses of funds during the first year
was......
a. 55 and 131
b. 37 and 131
c. 55 and 105
d. 37 and 105
Ans - a
.............................................
2. The long term sources of funds and long term use of funds during the 2nd year
was......
a. 120 and 45
b. 100 and 45
c. 120 and 39
d. 112 and 39
Ans - d
.............................................
3. The short term sources of funds during the 2nd year, compared to the 1st year
have......
a. shown increase
b. shown decline
c. shown no change
d. none of the above
Ans - a
.............................................
4. The long term of use of funds during the 2nd year, compared to the 1st year has ......
a. shown increase
b. shown decline
c. shown no change
d. none of the above
Ans - b
.............................................
5. Current Ratio and Quick Ratio for the 2nd year are respectively......
a. 2.20:1 and 0.8:1
b. 2.42:1 and 0.9:1
c. 2.25:1 and 0.9:1
d. 2.22:1 and 0.8:1
Ans - c
.............................................
6. What is the Debt-equity ratio for the 1st and 2nd year?
a. 1.11:1 and 1.49:1
b. 1.49:1 and 1.11:1
c. 1.32:1 and 1.11:1
d. 1.98:1 and 1.73:1
Ans - d
.............................................
7. Cash accrual for 1st and 2nd year respectively is......
a. 8 and 9
b. 9 and 8
c. 11 and 12
d. 12 and 11
Ans - c
.............................................
8. Net Working Capital of 2nd year, over the 1st year has shown......
a. no change
b. deterioration
c. increase
d. decline and improvement
Ans - b
.............................................
9. Net profit to sales ratio for the 1st year has been......
a. 2.3%
b. 2.5%
c. 2.9%
d. 3.4%
Ans - b
.............................................
JAIIB-AFB-CASE STUDIES/NUMERICAL QUESTIONS
Cost of asset = 1,00,000
Estimated residual value = 10,000
Estimated useful life of asset = 5 years
Find the book value at the end of 2nd year using double declining balance method.
a. 24000
b. 36000
c. 40000
d. 64000
Ans - b
Explanation
Depreciation rate = (1/useful life) x 200%
= 1/5 x 200% = 20% x 2 = 40%
(*) depreciation stops when book value = residual value
[Year 1]
Depreciation amount for year 1
= beginning book value x depreciation rate
= 1,00,000 x 40% = 40,000
Accumulated depreciation at the end of year 1 = 40,000
Book value at the end of year 1
= 1,00,000 - 40,000 = 60,000
[Year 2]
Depreciation amount for year 2
= beginning book value x depreciation rate
= 60,000 x 40% = 24,000
Accumulated depreciation at the end of year 2
= 40,000 + 24,000 = 64,000
Book value at the end of year 2
= 1,00,000 - 64,000 = 36,000
[Year 3]
Depreciation amount for year 3
= beginning book value x depreciation rate
= 36,000 x 40% = 14,400
Accumulated depreciation at the end of year 3
= 40,000 + 24,000 + 14,400 = 78,400
Book value at the end of year 3
= 1,00,000 - 78,400 = 21,600
[Year 4]
Depreciation amount for year 4
= beginning book value x depreciation rate
= 21,600 x 40% = 8,640
Accumulated depreciation at the end of year 4
= 40,000 + 24,000 + 14,000 + 8,640 = 87,040
Book value at the end of year 4
= 1,00,000 - 87,040 = 12,960
[Year 5]
Depreciation amount for year 5
= beginning book value x depreciation rate
= 12,960 x 40% = 5,184
[NOTE]
For year 5, depreciation amount will not be 5,184.
If 5,184 is depreciated,
--> book value = 12,960 - 5,184 = 7,776
--> book value < residual value
Depreciation stops when book value = residual value
--> depreciation amount for year 5 = 2,960
--> book value = 12,960 - 2,960 = $10,000
.............................................
JAIIB-AFB-CASE STUDIES/NUMERICAL QUESTIONS
Cost of asset = 8,00,000
Estimated residual value = 10% of the cost
Estimated useful life of asset = 5 years
Find the book value at the end of 1st year using double declining balance method.
a. 240000
b. 320000
c. 480000
d. 660000
Ans - c
Explanation
Depreciation rate = (1/useful life) x 200%
= 1/5 x 200% = 20% x 2 = 40%
[Year 1]
Depreciation amount for year 1
= beginning book value x depreciation rate
8,00,000 x 40% = 3,20,000
Accumulated depreciation at the end of year 1 = 3,20,000
Book value at the end of year 1
8,00,000 - 3,20,000 = 4,80,000
.............................................
Cost of asset = 8,00,000
Estimated residual value = 10% of the cost
Estimated useful life of asset = 5 years
Find the accumulated depreciation for the 2nd year using double declining balance
method.
a. 312000
b. 424000
c. 512000
d. 604000
Ans - c
Explanation
Depreciation rate = (1/useful life) x 200%
= 1/5 x 200% = 20% x 2 = 40%
[Year 1]
Depreciation amount for year 1
= beginning book value x depreciation rate
8,00,000 x 40% = 3,20,000
Accumulated depreciation at the end of year 1 = 3,20,000
Book value at the end of year 1
8,00,000 - 3,20,000 = 4,80,000
[Year 2]
Depreciation amount for year 2
= beginning book value x depreciation rate
4,80,000 x 40% = 1,92,000
Accumulated depreciation at the end of year 2
3,20,000 + 1,92,000 = 5,12,000
.............................................
Cost of asset = 8,00,000
Estimated residual value = 10% of the cost
Estimated useful life of asset = 5 years
Find the book value at the end of 1st year using double declining balance method.
a. 240000
b. 320000
c. 480000
d. 660000
Ans - c
Explanation
Depreciation rate = (1/useful life) x 200%
= 1/5 x 200% = 20% x 2 = 40%
[Year 1]
Depreciation amount for year 1
= beginning book value x depreciation rate
8,00,000 x 40% = 3,20,000
Accumulated depreciation at the end of year 1 = 3,20,000
Book value at the end of year 1
8,00,000 - 3,20,000 = 4,80,000
[Year 2]
Depreciation amount for year 2
= beginning book value x depreciation rate
4,80,000 x 40% = 1,92,000
Accumulated depreciation at the end of year 2
3,20,000 + 1,92,000 = 5,12,000
Book value at the end of year 2
8,00,000 - 5,12,000 = 2,88,000
2,88,000 x 40% = 1,15,200
5,12,000 + 1,15,200 = 6,27,200
8,00,000 - 6,27,000 = 1,72,800
1,72,800 x 40% = 69,120
6,27,200 + 69,120 = 6,96,320
8,00,000 - 6,96,320 = 1,03,680
1,03,680 - 80,000 = 23,680
6,96,320 + 23,680 = 7,20,000
8,00,000 - 7,20,000 = 80,000
.............................................
JAIIB-AFB-CASE STUDIES/NUMERICAL QUESTIONS
Sahil took a loan for 6 years at the rate of 5% per annum on Simple Interest, If the total
interest paid was Rs. 1230, the principal was
A. 4100
B. 4200
C. 4300
D. 4400
Ans - A
Explanation:
S.I.=P*R*T/100
=>P=S.I.*100/R/T
By applying above formula we can easily solve this question, as we are already having
the simple interest.
P = 1230*100/6/5
= 4100
.............................................
There was simple interest of Rs. 4016.25 on a principal amount at the rate of 9%p.a. in
5 years. Find the principal amount
A. Rs 7925
B. Rs 8925
C. Rs 7926
D. Rs 7925
Ans - B
Explanation:
S.I.=P*R*T/100
=>P=S.I.*100/R/T
P = 4016.25*100/9/5
= 8925
.............................................
Effective annual rate of interest corresponding to nominal rate of 6% per annum
compounded half yearly will be
A. 6.09%
B. 6.10%
C. 6.12%
D. 6.14%
Ans - A
Explanation:
Let the amount Rs 100 for 1 year when compounded half yearly, n = 2, Rate = 6/2 =
3%
Amount=100(1+3/100)^2=106.09
Effective rate = (106.09 - 100)% = 6.09%
.............................................
A sum of money invested at compound interest to Rs. 800 in 3 years and to Rs 840 in 4
years. The rate on interest per annum is.
A. 4%
B. 5%
C. 6%
D. 7%
Ans - B
Explanation:
S.I. on Rs 800 for 1 year = 40
Rate = (100*40)/(800*1) = 5%
.............................................
Find the rate at Simple interest, at which a sum becomes four times of itself in 15 years.
A. 10%
B. 20%
C. 30%
D. 40%
Ans - B
Explanation:
Let sum be x and rate be r%
then, (x*r*15)/100 = 3x [important to note here is that simple interest will be 3x not 4x,
beause 3x+x = 4x]
=> r = 20%
.............................................
At 5% per annum simple interest, Rahul borrowed Rs. 500. What amount will he pay to
clear the debt after 4 years ?
A. 750
B. 700
C. 650
D. 600
Ans - D
Explanation:
We need to calculate the total amount to be paid by him after 4 years, So it will be
Principal + simple interest. So,
=>500+500*5*4/100
=>Rs.600
.............................................
A sum of money amounts to Rs 9800 after 5 years and Rs 12005 after 8 years at the
same rate of simple interest. The rate of interest per annum is ......
a. 9%
b. 10%
c. 11%
d. 12%
Ans - d
Explanation:
We can get SI of 3 years = 12005 - 9800 = 2205
SI for 5 years = (2205/3)*5 = 3675 [so that we can get principal amount after deducting
SI]
Principal = 12005 - 3675 = 6125
So Rate = (100*3675)/(6125*5) = 12%
.............................................
JAIIB-AFB-CASE STUDIES/NUMERICAL QUESTIONS
A man saves Rs 200 at the end of each year and lends the money at 5% compound
interest. How much will it become at the end of 3 years?
a. Rs 660
b. Rs 662
c. Rs 664
d. Rs 666
Ans- b
Explanation:
= [200(2120×2120×2120)+200(2120×2120)+200(2120)]
= 662

MORTGAGE

 Mortgage

. Mortgage is defined in Section 58 of the Transfer of Property Act.
2. Mortgage is the transfer of interest in a specific immovable property, for the purpose of securing an existing or future debt or
for the performance of an engagement which may give rise to a pecuniary liability. The person creating the mortgage is called as
the mortgagor and the person in whose favour mortgage is created (bank) is called as the mortgagee.
3. Immovable property, means land and things attached or permanently fastened to the earth.
4. Types of Mortgage: There are six types of mortgages namely (i) Simple Mortgage (ii) Mortgage by Conditional Sale (iii)
Usufructuary Mortgage (iv) English Mortgage (v) Mortgage by Deposit of title Deeds (Equitable Mortgage) and (vi). Anamalous
Mortgage. Of these, all • mortgages except Equitable Mortgage require registration with the Registrar of Assurances.
5. Registered Mortgage: In the case of registered mortgage (also called legal mortgage) first a mortgage deed is written which is
stamped as per Stamp Act of the concerned state. The deed is then executed in the presence of two witnesses. Thereafter, in
terms of the Indian Registration Act 1908, it is to be registered with the Registrar of Assurances (Sub Registrar) within 4 months of
the execution.
6. Simple Mortgage: In simple mortgage the mortgagor makes himself personally liable to pay the debt and agrees that in the
event of failing to pay according to his contract, mortgagee can get the property sold through the intervention of the court. If after
sale of property some debt is still outstanding, the borrower shall be- personally liable for the outstanding amount. Neither the
possession nor ownership of the property is transferred to the mortgagee. The mortgagee cannot exercise the right of foreclosure.
7. Mortgage by Conditional Sale: The mortgagor ostensibly sells the property to the mortgagee upon the condition that if the
debt is paid in time the property will be transferred back to him and in case of nonpayment within the specified time the
transaction would become a real sale. There is no personal liability of the mortgagor. In case of default, the mortgagee can exercise
his right of foreclosure through court.
8. Usufructuary Mortgage: In this mortgage, possession of the property is transferred to the mortgagee. The mortgage money is
recovered through income of the mortgaged property. There is no personal liability of mortgagor.
9. English Mortgage: As in the case of simple mortgage, the mortgagor undertakes personal liability to pay the debt. He transfers
the ownership of mortgaged property to the mortgagee upon a condition that property must be transferred back to him on
payment of debt. Mortgagee can sell the mortgaged property even without the intervention of court.
Equitable Mortgage
1. Equitable Mortgage is called as Mortgage by Deposit of Title Deeds.
2. It can be created by mere deposit of title deeds of property with intention to borrow.
3 a.Title deeds should be deposited at Mumbai, Kolkata, Chennai ( Presidency Towns) or any other town notified by the State
Government in this regard. It is not necessary that the title deeds should be deposited with the branch or at the place where the
loan is being raised.
3 b.These can be deposited anywhere in India at a notified place.
it is not necessary that it should be within bank branch premises. Mortgagor can deliver the title deeds to an authorized
representative of the bank at mortgagor's residence or other place provided it is in a Notified Centre.
4. The property to be mortgaged may be located anywhere in India (For example, for property located in Delhi, title deeds can be
deposited at Chennai.
5. Equitable Mortgage does not require registration with Registrar of Assurances. But in case of a limited company, charge in
yespect of equitable mortgage under Section 125 of the Companies Act, 1956 must be registered with Registrar of Companies.
6. A title deed can be a sale deed, lease deed, partition deed, gift deed, deed of assignment, deed of relinquishment, or such
other documents. Agreement to sale is not a title deed.
7. Normally a bank should insist for original title deeds but in exceptional cases equitable mortgage can be. created even by
certified copy of the title deeds.
8. Property located in cantonment areas should not be accepted for equitable mortgage, without clearance from cantonment
authorities.
10.The bank should not part with the title deeds even for a short duration at the request of the mortgagor because if some other
creditor is induced to finance on the basis of title deeds, the bank may Lose priority over the mortgaged property.
11. No registration with Registrar of Assurance is required. For a company, registration with ROC within 30 days is required u/s
87 of Companies Act 2013. Under SARFAESI Act, registration with CERSAI.
12.Deposit can take place within Municipal limits of Presidency Towns (Kolkata, Chennai or Mumbai) or State Govt. Notified Towns.
It is not necessary that the place for deposit of title.deeds, should be bank branch premises
Legal Opinion and Search Report: Before accepting mortgage of immovable property, legal opinion should be
obtained that the property is fit for mortgage and search should be conducted in the records of Registrar /Sub
Registrar for at least 12 years to ensure that the property is free from prior encumbrance.
Priority of Mortgage: The priority of the mortgage is considered from the date of execution of the mortgage deed (in the case of
registered mortgage) or from the date of creation of mortgage by deposit of title deeds and not with reference to the type of
mortgage or date of registration.
Right of Redemption: Right of the mortgagor to get back his mortgaged property on repayment of the loan, is called as the right of
redemption. This is available in all types of mortgages.
Right of foreclosure: The right of the mortgagee to deny the mortgagor of the property to exercise his right of redemption i.e.
debarring the mortgagor for ever to get back the mortgaged property is called as the right of foreclosure. This right is available to
the mortgagee in case of mortgage by conditional sale.

PARTNERS’ CAPITAL AND LOAN ACCOUNTS

 PARTNERS’ CAPITAL AND LOAN ACCOUNTS

A. Methods of Maintaining Capital Accounts
The Partners’ capital accounts may be maintained by two methods, viz., Fixed Capital Method and Fluctuating Capital Method. Generally, the partnership deed mentions the method of maintaining capital accounts. If a particular method is stated in the partnership deed then the firm has to maintain the capital accounts only by that method. However, if there is no mention about the method of maintaining capital accounts in the partnership deed, the capital accounts are maintained as per the Fluctuating Capital Method.
(a) Fixed Capital Method
Under this method, for each partner two accounts are maintained. One is called the partner’s capital account and the other is called partner’s current account. Partner’s capital account is credited with the amount of capital contributed by the partner. All the adjustments regarding interest on capital, interest on drawings and share in profit or loss are recorded in the current account.
(b) Fluctuating Capital Method
Under this method, all the transactions relating to a partner are entered in only one capital account maintained for him. No current account is opened as in the Fixed Capital Method. Capital account is credited, not only with the amount contributed by him/her as capital, but other transactions, such as interest on capital, drawings and share of profits, are also recorded in the same capital account.


B. Partners’ Loan Accounts
Loans given by the partners, exclusive and independent of contributions by way of capital, are recorded in separate accounts called Partners’ Loan Accounts, keeping the Capital Accounts undisturbed.

C. Interest on Capital, Drawings and Loans from Partners
If there is an agreement to allow interest on capital, loan and drawings, interest is calculated at a rate specified in the agreement. In the absence of any such provision in the agreement, no interest will be allowed/charged on the capital and drawings and interest at the rate of 6 per cent per annum will be allowed on the partners’ loans to the firm. It may further be noted that, in the absence of any agreement to the contrary, interest to partners, on the capital account, will be paid only if there is a profit. However, interest on a loan, given by the partners, has to be allowed, irrespective of the fact that there is no profit.

GOODWILL AND METHOD OF ITS VALUATION

 GOODWILL AND METHOD OF ITS VALUATION

Goodwill is the value of an established business over and above the value represented by its tangible assets. It is the reputation that the firm has built up in the course of its business. It is also the value attached to the super profit earning capacity of a business arising from its wide connections and long standing in the business. Goodwill is the value of the good name of a firm, which attracts more customers and helps it earn more profits. It is an intangible fixed asset built up slowly by the owners of the business over a period of time and is very often recorded in the books of account. Unlike a fictitious asset, which has no realisable value, Goodwill has a realisable value and can be bought and sold in the market.
Necessity: The necessity for valuation of goodwill in a firm arises in the following cases:
1. Change in profit sharing ratio.
2. Admission of a new partner.
3. Retirement, expulsion or death of a partner
4. Sale of business
There are mainly three methods of valuation of goodwill, viz. (i) Average Profit Method
(ii) Super Profit Method
(iii) Capitalisation of Profit Method
(i) Average Profit Method
In this method, goodwill is valued on the basis of the average profits of past few years (normally abnormal increase or decrease in profit is left out). Average profit (simple or weighted), so arrived at, is multiplied by an agreed multiplier factor (called number of years’ purchase) and the amount so arrived is taken as the amount of goodwill.


(ii) Super Profit Method
Under this method, goodwill is calculated on the basis of the number of years’ purchase of Super Profits. Super Profit is the difference between the Actual Profit and the normal expected profit in the trade.

Super profit is multiplied by a certain multiplier, as in the simple average method.

 (iii) Capitalisation of Profit Method
Under this method, value of goodwill is arrived at after capitalising the normal profit at a given reasonable or normal rate of return. Profit, when divided by the normal rate of return, gives the amount, which should have been invested in the business of the firm in the form of capital. This value is compared with the net assets of the firm. The value of goodwill is the excess of capitalised value over the net assets of the firm.


ADMISSION OF A PARTNER

A new partner may be admitted into an existing partnership for the purpose of securing additional capital or additional skill or for any other purpose. When a new partner is admitted in an existing firm, the new partner will get certain benefits such as:
•     Share in the assets and liabilities of the firm.
•     Share in the profit/loss of the firm.
•     Share in the goodwill enjoyed by the firm.


All these advantages are derived by the new partner at the initial sacrifice of the old partners. Thus, at the time of admission of a new partner, the following steps are required to be taken by the firm:
1. Revaluation of assets and liabilities

2. Treatment of goodwill

3. Decision regarding amount of capital to be brought in by the new partner

4. Adjustment regarding accumulated losses and reserves

5. Capital accounts of the partner.

1. Revaluation of Assets and Liabilities
A new partner, admitted into a partnership, gets a share in the profits as well as the assets of the business. On the date of admission of the new partner, the real value of assets of the firm may be more or less than the value appearing in the books of account. This increase or decrease in value belongs entirely to the old partners and hence, has to be adjusted before the admission of the new partner. Similarly, the liabilities existing on the date of admission of the new partner may also need revision.
When the asset value increases, there is a profit and when it goes down, there is a loss. When liabilities increase, there is a loss and when liabilities decrease, there is a profit. This increase or decrease in assets and liabilities is adjusted to the accounts of the old partners through an account called the
‘Revaluation Account’ or ‘Profit and loss Adjustment Account’. The entries recorded in this account are on the principle that when there is a loss, debit profit and loss adjustment account and when there is a gain, credit profit and loss adjustment account. The difference in the two sides of this account will show either profit or loss, which is transferred to the accounts of the old partners in old profit sharing ratio.

2. Treatment of Goodwill
A. Admission of a Partner
When a new partner is admitted to partnership, adjustments of goodwill is necessary because goodwill has been built up by the old partners over a period of years for which they have worked hard and they would not like to just pass on a part of it to the new partner. The new partner also gets a share in profits of the firm from the date of his admission, which is sacrificed by the existing partners. The existing partners would not like to just pass on this benefit to the new partner without a consideration.

B. Retirement or Death of a Partner
On retirement or death of any partner, the portion of goodwill of the firm belonging to the retiring partner or the partner who died, has to be paid by the continuing/surviving partners, to the retiring partner or the heirs of the deceased partner, as the case may be. As the continuing/surviving partners gain in terms of increase in share of profits due to death/retirement of a partner, they bear this amount of goodwill paid, in the gain ratio.
                                     
3. Capital to be brought in by a New Partner
The new partner brings in capital, in addition to goodwill, to get a share in the firm’s assets, liabilities and profits. It can be in the form of cash or assets.


4. Adjustment Regarding Accumulated Losses and Reserves
Normally, the profits of the partnership are divided between the partners at the end of each year. In case, a part of the profits is kept in reserve, to take advantage of it in bad times, then the old partners would not like the newly admitted partner to share the benefit of this reserve or undistributed profits. Therefore, the said amount is divided by the old partners amongst themselves in the old profit sharing ratio.
Sometimes, losses of the earlier years are carried by the partnership under the head profit and loss account. They also belong entirely to the old partners and the new partner would definitely not bear this loss.

5. Adjustment of Capital Accounts of Partners
Sometimes, it may be decided that after the admission of a new partner, the old partners’ capitals should also be adjusted according to the new profit sharing ratio. This is because old partners’ capital balances may have changed considerably due to revaluation of assets and liabilities, transfer of reserves, adjustment of goodwill, etc. For this purpose, generally, the new partner’s capital and his share of profit are taken as the basis for calculation and the old partners’ capitals are ascertained according to the future profit sharing ratio. The amounts so arrived at are compared with the capitals standing to the credit of their capital accounts. Excess may be paid off by the firm to the old partners and deficiency, if any, may be required to be made up by them by bringing in additional cash.


RETIREMENT AND DEATH OF A PARTNER


A. Retirement of a Partner
Retirement of a partner means that the partner breaks off his/her relations with all other partners and withdraws himself/herself from the firm.
Reasons of Retirement
(a) Due to old age
(b) Retiring partner may not have faith in the future prospects of the firm or in other partners
(c) Difference of opinion with other partners
(d) Retiring partner may migrate or shift from the place of business
(e) Voluntarily decides to retire
(f) As per terms of partnership deed.
According to Section 32 of the Indian Partnership Act, 1932, a partner may retire: (a) with the consent of all the partners,
(b) in accordance with the terms of the partnership agreement, or
(c) by giving a notice to all the partners of his intention to retire, when the partnership is ‘At Will’.
In case of retirement, a retiring partner is interested in collecting his share in the various activities of the business of which he was a part owner till the date of his retirement.

B. Death of a Partner
In retirement, a partner breaks off his/her relation with the firm voluntarily, i.e. on his own. Death of a partner automatically terminates such relationship. Unlike retirement, which is on a specific convenient date mutually agreed upon with other partners, death of a partner can occur at any time during the accounting year.

C. New Profit Sharing Ratio of Continuing Partners
After retirement or death of a particular partner, the continuing partners may agree to share the profits in the same old ratio or in a new agreed ratio. The ratio in which the continuing partners gain or benefit from the share of the retiring or dead partner is called the ‘Gaining ratio’. Gaining ratio is equal to the new ratio minus the old ratio.

D. Joint Life Policy
In order to provide for the cash in contingency like the death of a partner, etc., a firm may decide to take a joint life policy on the lives of partners so that the proceeds received from the insurance company may be utilised to make payments of the dues of a deceased partner and the firm is saved from financial hardship.


SLEEPING PARTNER AND QUASI PARTNER


Sleeping Partner
In a partnership, very often, some partners agree to work while others are interested in merely investing the capital and getting a share of profits. Such partners are normally not interested in the day-to-day working of the partnership and are called sleeping partners. The other partners who work for the business of the firm are called working partners or active partners. However, it must be noted that law makes no difference between a sleeping partner and a working partner and the sleeping partner will be equally responsible to the third parties for all acts or omissions of a working partner.

Quasi or Nominal Partner
Sometimes, some prominent persons lend their names to a firm in order to allow the firm to enjoy their goodwill in furtherance of its business. Likewise, in some cases, a person’s name may be used by the partnership firm showing him/her to be a partner, whereas the person is, in fact, not a partner in the firm. In such cases, although no relationship of partnership exists, the law stops a person from disclaiming his/her status as partner vis-à-vis third parties, if he/she keeps quiet, in spite of being fully aware of the fact that his/her name is utilised as partner. Such a quasi-partnership protects the third parties who may make a non-partner liable in these circumstances.
 

Very important for JAIIB errors

 Rectification of errors

Keeping in view the nature of errors, all the errors can be classified into the following
four categories:
Errors of Commission : These are the errors which are committed due to wrong posting
of transactions, wrong totalling or wrong balancing of the accounts, wrong casting of
the subsidiary books, or wrong recording of amount in the books of original entry, etc.
For example: Raj Hans Traders paid Rs. 25,000 to Preetpal Traders (a supplier of
goods). This transaction was correctly recorded in the cashbook. But while posting to
the ledger, Preetpal’s account was debited with Rs. 2,500 only.
Errors of Omission : The errors of omission may be committed at the time of recording
the transaction in the books of original entry or while posting to the ledger. These can
be of two types: (i) error of complete omission (ii) error of partial omission When a
transaction is completely omitted from recording in the books of original record, it is an
error of complete omission. For example, credit sales to Mohan Rs. 10,000, not entered
in the sales book. When the recording of transaction is partly omitted from the books, it
is an error of partial omission. If in the above example, credit sales had been duly
recorded in the sales book but the posting from sales book to Mohan’s account has not
been made, it would be an error of partial omission.
Errors of Principle : Accounting entries are recorded as per the generally accepted
accounting principles. If any of these principles are violated or ignored, errors resulting
from such violation are known as errors of principle. For example, amount spent on
additions to the buildings should be treated as capital expenditure and must be debited
to the asset account. Instead, if this amount is debited to maintenance and repairs
account, it has been treated as a revenue expense.
Compensating Errors : When two or more errors are committed in such a way that the
net effect of these errors on the debits and credits of accounts is nil, such errors are
called compensating errors. For example, if purchases book has been overcast by Rs.
10,000 resulting in excess debit of Rs. 10,000 in purchases account and sales returns

book is undercast by Rs. 10,000 resulting in short debit to sales returns account is a
case of two errors compensating each other’s effect.
Rectification of Errors
Errors can be classified into two categories for the purpose of rectification of errors-
Rectification of Errors which do not Affect the Trial Balance
The following errors do not affect the equality of the Trial Balance totals:
Errors of Omission: A transaction is omitted completely from the books so that there is
no debit and credit entry of the transaction, e.g. Drawings of Rs. 5000 cash by the
proprietor was not recorded.
Errors of Commission: An entry is posted to the correct side of the ledger but to the
wrong account, i.e. items have been posted to the wrong account of the same class,
e.g. Payment of Rs. 1000 cash by a customer A. John was wrongly posted to the
account of another customer, B. Johan.
Errors of Principle: An entry is made in the wrong class of account, i.e. when an
expense is treated as an asset and vice versa, e.g. Repairs to building Rs. 4000 was
debited to the Building Account.
Complete Reversal of Entries: An account that should be debited is credited and vice
versa, e.g. A cheque Rs. 2000 received from Sunita was debited to the account of Sunita
and credited to the Bank Account.
Compensating Errors: Errors (or error) on one side of the ledger are compensated by an
error (or errors), e.g. The Purchases Account and Sales Account were both overcast by
Rs. 1500.
Errors of Original Entry: The original figure may be incorrectly entered although the
correct double-entry principle has been observed using this incorrect figure, e.g. Credit
sales of Rs. 9650 to Ranjit was recorded in the Sales Account and Ranjit's account as
Rs. 6950.
Rectification of Errors which Affect the Trial Balance
Errors which are revealed by the Trial Balance are those errors which cause the Trial
Balance totals to be in disagreement.
Errors in Calculation: If there is any miscalculation of the Trial Balance totals or the net
account balances, the Trial Balance will not balance, e.g. There was an error in the
calculation of the cash balance, causing the Trial Balance totals not to balance too.
Errors in Omission of One Entry: Omission of either the debit or credit entry of a
transaction will cause the totals of the Trial Balance not to agree, e.g. A cheque Rs.
5000 received for commission was debited to the Bank Account only.
Posting to the Wrong Side of An Account: Entry into the wrong side of an account will
cause one side of the ledger to be more than the other, e.g. A cheque of Rs. 8000 paid
to creditor, K. Raj was credited instead of debited to his account.
Errors in Amount: If the debit entry of a transaction differs in amount with the credit
entry, the Trial Balance will not balance, e.g. Cash Rs. 9650 received from Anand was
debited to the Cash Account as Rs. 9650 and credited to the account of Anand as Rs.
6950.
...................................................
Capital and revenue expenditure
Capital expenditures are for fixed assets, which are expected to be productive assets for
a long period of time. Revenue expenditures are for costs that are related to specific
revenue transactions or operating periods, such as the cost of goods sold or repairs and
maintenance expense.
The differences between these two types of expenditures are as follows:
Timing - Capital expenditures are charged to expense gradually via depreciation, and
over a long period of time. Revenue expenditures are charged to expense in the current
period, or shortly thereafter.
Consumption - A capital expenditure is assumed to be consumed over the useful life of
the related fixed asset.

Size - A more questionable difference is that capital expenditures tend to involve larger
monetary amounts than revenue expenditures. This is because an expenditure is only
classified as a capital expenditure if it exceeds a certain threshold value; if not, it is
automatically designated as a revenue expenditure. However, certain quite large
expenditures can still be classified as revenue expenditures, as long they are directly
associated with sale transactions or are period costs.

PPB recollected questions on 06.12.2020

  PPB recollected questions on 06.12.2020

SMA-0 Principal or interest payment not overdue for more than 30 days but account showing signs of incipient stress

SMA-1 Principal or interest payment overdue between 31-60 days

SMA-2 Principal or interest payment overdue between 61-90 days

Governor of the Reserve Bank of India – Chairperson, ex officio; (Shri Shaktikanta Das) of MPC

5 Mark's question are easy just odd one out you can manage them easily

Many questions on ethics and professionalism

One question was there on there on LC financing

Call money

Locker nomination

CRR

Conflict of interest

Penetration marketing

Minor do not want to be a partner

Basel 2 and 3,

Marketing mix,

case studies on nomination in locker accounts,

LANS,

business value,

Ethical dilemma,

pledge,

hypo, .

mortgage and assignment match the following,

numerical on NPA provision for doubtful assets.

Priority sector advances to weaker sections,

updated investment and turnover for micro industries,

diversification,

MKIS

customer banker relationship

question regarding SWITF

PMJDY

PMAPY

PMJJBY

PMSBY

Fair practice of lending

Non popular social networking site

Code of conduct for Direct Sales Agent made by?

Valuation of Mutual fund on...

Pre shipment credit

FCNR(B) is ___ form of term deposit

Data mining tools

Frauds committed by large number of customers

Call money market

Minor who doesn't want to be in partnership should do...

Business facilitator work on behalf of...

Ethical Dilemma

Increase in CRR...

type of mergers

Locker operation related

current ratio compare

Liberalized Remittance scheme related

marketing 15 question

ethics 15 questions

Cash management services related

Mutual fund scheme

NPA- D1, D2 related questions

Provisioning numerical

Priority sector related

Identify weaker section

Endorsement case study

Banking regulation act ke question

Rangarajan Committee

Narasimham committee

Classification of Assets 

Computerization in Banks 

Priority Sector – Target 

Money Market 

Marketing Ethics 

Match the Following – Vehicle, LIC Policy, Land, Hypothecation, Pledge Etc 

Provision of Doubtful Assets 

Banking Regulation ACT 

NPA 

General Banking – Either or Survivor 

MSME 

TNW 

Current Ratio 

SWIFT – related working DAYS 

CRILC – who developed (Ans: RBI) 

REPO RATE – Definition 

MICRO/SMALL /MEDIUM 

ISO Standards for smart cards – ISO 7816

ATM 

Weaker sections in PSL 

PMJJBY 

Mortgage 

MCLR 

PRODUCT MIX 

Ex-Officio chairman of MPC (Ans: RBI Governor)

Penalty of non-maintenance of CRR 

Debt Market 

Marketing & Product Development 

Product Life Cycle Stages 

NRLM Objective 

Letter of Credit 

Commercial Paper 

MKIS(Marketing Information System)

 Rangarajan Committee

Narasimham committee

Classification of Assets 

Computerization in Banks 

Priority Sector – Target 

Money Market 

Marketing Ethics 

Match the Following – Vehicle, LIC Policy, Land, Hypothecation, Pledge Etc 

Provision of Doubtful Assets 

Banking Regulation ACT 

NPA 

General Banking – Either or Survivor 

MSME 

TNW 

Current Ratio 

SWIFT – related working DAYS 

CRILC – who developed (Ans: RBI) 

REPO RATE – Definition 

MICRO/SMALL /MEDIUM 

ISO Standards for smart cards – ISO 7816

ATM 

Weaker sections in PSL 

PMJJBY 

Mortgage 

MCLR 

PRODUCT MIX 

Ex-Officio chairman of MPC (Ans: RBI Governor)

Penalty of non-maintenance of CRR 

Debt Market 

Marketing & Product Development 

Product Life Cycle Stages 

NRLM Objective 

Letter of Credit 

Commercial Paper

Business value

Ethical dilemma

Pledge, hypo, mortgage and assignment match the following

Numerical on NPA provision for doubtful assets

Priority sector advances to weaker sections

Updated investment and turnover for micro industries

Diversification

MKIS

Basel 2 and 3

Marketing Mix

Case studies on nomination in locker accounts

LAN

Questions on cheque conversion

call money market

PMJDY

Fair practice of lending

Non popular social networking site

Code of conduct for Direct Sales Agent made by?

Valuation of Mutual fund on…

Pre shipment credit

FCNR(B) is _ form of term deposit

Data mining tools

Frauds committed by large number of customers\

Call money market

Minor who doesn’t want to be in partnership should do…

Business facilitator work on behalf of…

Ethical Dilemma

Increase in CRR…

PMAPY

PMJJBY

PMSBY

Banking definition

Accept deposit purpose

Bank interest rates in marketing

Which one is not mkis

gross advance

Net working capital

Weaker section categories

Fair practice of lender 2 to 3 questions

mutual fund related 1

Rangarajan Committee

Narasimham committee

Classification of Assets

Computerization in Banks

Priority Sector – Target

Computerization in Banks

Priority Sector – Target

Money Market

Marketing Ethics

Match the Following – Vehicle, LIC Policy, Land, Hypothecation, Pledge Etc

Provision of Doubtful Assets

Banking Regulation ACT

NPA

General Banking – Either or Survivor

MSME

TNW

Current Ratio

SWIFT – related working DAYS

CRILC – who developed (Ans: RBI)

REPO RATE – Definition

MICRO/SMALL /MEDIUM

ISO Standards for smart cards – ISO 7816

ATM

Weaker sections in PSL

Mortgage

MCLR

PRODUCT MIX

Ex-Officio chairman of MPC (Ans: RBI Governor)

Penalty of non-maintenance of CRR

Debt Market

Marketing & Product Development

Product Life Cycle Stages

NRLM Objective

Letter of Credit

Marketing Ethics

Match the Following – Vehicle, LIC Policy, Land, Hypothecation, Pledge Etc

Provision of Doubtful Assets

Banking Regulation ACT

NPA

General Banking – Either or Survivor

MSME

TNW

Current Ratio

SWIFT – related working DAYS

CRILC – who developed (Ans: RBI)

REPO RATE – Definition

MICRO/SMALL /MEDIUM

ISO Standards for smart cards – ISO 7816

ATM

Mortgage

MCLR

Marketing & Product Development

Product Life Cycle Stages

NRLM Objective

Letter of Credit

Commercial Paper

MKIS(Marketing Information System)

Updated list of accounting standards:-

  Updated list of accounting standards:-

AFB 

Accountant Standards:-List of ICAI’s Mandatory Accounting Standards (AS 1~29)

Download PDF copy of Mandatory Accounting Standards of ICAI (as on 1 July 2017 and onwards), as under:

Description

AS 1 Disclosure of Accounting Policies

AS 2 Valuation of Inventories (amended) *

AS 3 Cash Flow Statements

AS 4 Contingencies and Events Occurring after the Balance Sheet Date *

AS 5 Net Profit or Loss for the period,Prior Period Items and Changes in Accounting Policies

AS 6 Depreciation Accounting (withdrawn) *

AS 7 Construction Contracts (revised 2002)

AS 8 Accounting for Research and Development (withdrawn for AS 26)

AS 9 Revenue Recognition

AS 10 Accounting for Fixed Assets (amended) *

AS 11 The Effects of Changes in Foreign Exchange Rates (revised 2003) **

AS 12 Accounting for Government Grants

AS 13 Accounting for Investments (amended) *

AS 14 Accounting for Amalgamations (amended) *

AS 15 Employee Benefits (revised 2005)

AS 16 Borrowing Costs

AS 17 Segment Reporting

AS 18 Related Party Disclosures

AS 19 Leases

AS 20 Earnings Per Share

AS 21 Consolidated Financial Statements (amended) *

AS 22 Accounting for Taxes on Income

AS 23 Accounting for Investments in Associates in Consolidated Financial Statements

AS 24 Discontinuing Operations

AS 25 Interim Financial Reporting

AS 26 Intangible Assets

AS 27 Financial Reporting of Interests in Joint Ventures

AS 28 Impairment of Assets

AS 29 Provisions,Contingent Liabilities and Contingent Assets (amended) *. List of ICAI’s Non-Mandatory Accounting Standards (AS 30~32)

ICAI has announced on 15 Nov. 2016 that ‘AS 30- Financial Instruments: Recognition and Measurement’, ‘AS 31- Financial Instruments: Presentation’, ‘AS 32- Financial Instruments: Disclosures’ stands withdrawn

CISA

  CISA (Certified Information Systems Auditor)- IT Certification Course.

The Benefits of CISA: With a CISA designation, there's no need to question your credentials. You've a CISA, so your credentials are understood.

CISA Impacts Your Career & Your Organization:
Enterprises demand IS audit professionals that possess the Knowledge & Expertise to help then identify critical issues & customize practices to support trust in & value from information systems.
The Skills & Practices that CISA promotes & evaluates are the building blocks of success in the field. Possessing the CISA demonstrates proficiency & is the basis for measurement in the profession.

CISA Certification:
- Confirms your Knowledge & Experience.
- Quantifies & Markets you expertise.
- Demonstrates that you have gained & maintained the level of Knowledge required to meet the dynamic challenges of Modern Enterpr- Demonstrates that you have gained & maintained the level of Knowledge required to meet the dynamic challenges of Modern Enterprise.
- Is globally recognized as the mark of excellence for IS Audit professional.
- Combines the achievement of passing a comprehensive exam with recognition of Work & Educational Experience, providing you with credibility in the marketplace.
- Increase you value to your organization.
- Gives you a competitive advantage over peers when seeking job growth.
- Helps you achieve a High Professional standard through ISACA's requirements for continuing Education & Conduct.

Why Employers Hire CISA:
With a growing demand for Individuals Possessing IS Audit, Control & Security Skills, CISA has become a preferred certification program by Individuals & Organizations around the WORLD.
CISA EMPLOYEES:
- Are Highly qualified, Experienced professionals.
- Provide the enterprise with a certification for IT assurance that's recognized by Multinational Clients, Lending Credibility to the enterprise.
- Are Excellent indicators of proficiency in technology controls.
- Demonstrate competence in 5 domains, including Standards & Practices; Organization & Management; Processes; Integrity, Confidentiality & Availability; & Software Development, Acquisition & Maintenance.
- Demonstrate a commitment to providing the enterprise with trust in & value from your information systems.
- Maintain ongoing professional development for successful on-the-job performance.

ANSI Accredited Certification Program PERSONAL CERTIFICATION:
CISA, CISM, CGEIT & CRISC Approved.
The ANSI (American National Standart Institure) has accredited the CISA certification program under ISO/IEC 17024:2012, General Requirements for Bodies Operating Certification Systems of Persons. ANSI a private, Non-Profit Organization, Accredits other organizations to serve as 3rd Party Product, System & Personnel Certifiers. ISACA is proud to be recognized with this International Standard of Performance..

Forex individual and operations exam differences

  IIBF certifications maximum members getting this doubt??

What is the difference between forex exchange for individuals and forex operations ??

1.Both Certifications are different

2.Foreign remittance facilities for individuals is a part of forex operations.

3. First one deals only with retail operations but in forex operations you will be learning about trade as well as trade finance

4. If you want to learn trade you can try forex operations.

Application of Altman Z Score / Bankruptcy Score Formula

  Application of Altman Z Score / Bankruptcy Score Formula

The formula is used to predict corporate defaults or bankruptcy or in academic language, financial distress position of companies.

The formula is based on discriminant analysis technique in statistical analysis.

The formula uses multiple variables from income statement and balance sheet of companies.

What’s the formula?

Formula =

Altman Z-Score = 1.2*T1 + 1.4*T2 + 3.3*T3 + 0.6*T4 + 1.0*T5

Here are the key definitions from the above formula:

T1 = Working Capital / Total Assets

This ratio measures liquid assets. The companies in trouble will usually experience shrinking liquidity.

T2 = Retained Earnings / Total Assets

This ratio calculates the overall profitability of the company. Dwindling profitability is a warning sign.

T3 = Earnings before Interest and Taxes / Total Assets

This ratio shows how productive a company is in generating earnings, relative to its size.

T4 = Market Capitalization / Total Liabilities

This ratio suggests how far the company’s assets can decline before it becomes technically insolvent (i.e., its liabilities become higher than its assets).

T5 = Sales / Total Assets

This is the asset turnover ratio and is a measure of how effectively the firm uses its assets to generate sales

Difference between Letter of Credit and Bank Guarantee

 Difference between Letter of Credit and Bank Guarantee

📣📣📣📣📣📣📣
Introduction🏙
⬅⬅⬅⬅⬅⬅⬅⬅
This two terminology looks similar but both are very different. When one wants to expand the business means beyond the national boundary or within, one needs assurance from the buyer side that after delivery of goods or services the payment will receive and this can be done by the bank only.

In short, both these terms are used while doing business or transactions with domestic or international companies.
So, both these services are facilitated by the bank but in a different way as per the need of seller party.
Letter of Credit🏙
⬅⬅⬅⬅⬅⬅⬅⬅⬅
It is used while there is a high level of risk involves in business.It is used while doing import and export transactions with international companies.L/C is a written commitment issued by the bank or some other financial institutions for payment assurance to the seller party from buyer’s request.In L/C, the seller gets a guarantee of payment from the buyer’s banks on the due date payment will receive only if the seller meets all the conditions of deal like timely delivery etc.Banks offer a service like L/C on the basis of proof provided by the buyer’s party.If the buyer fails to make payment to the seller, the bank pays on behalf of a buyer and then the bank will recover it from a buyer anyhow.Banks will charge fees for this type of facilities.So in short, letter of credit is beneficial when product or service is delivered and payment is not done.It eliminates the financial risk involved in the business.

Types of Letter of Credit🎎
⬅⬅⬅⬅⬅⬅⬅⬅⬅⬅⬅
🗼Irrevocable Letter of Credit:
It is not modified or cancelled without the concern of all the parties.
🗼Revocable Letter of Credit:
In it, the issuing bank can revoke or cancel the letter of credit any time without prior notice to the seller.
🗼Confirmed Irrevocable Letter of Credit:
In it, the confirming bank gives more assurance to seller same as issuing bank.
🗼Unconfirmed Irrevocable Letter of Credit:
In it, an advisory bank from the seller's side performs as an agent for the issuing bank without any responsibility to the seller.
🗼Revolving Letter of Credit
This type of letter is used if in case regular transactions take place and remain valid for a long term without issuing the another letter of credit.

Bank Guarantee🏙
⬅⬅⬅⬅⬅⬅⬅⬅⬅⬅
🏦 guarantee is a service by which bank gives a guarantee to the seller on behalf of his client for assurance of payment.
🏢So, Bank guarantee has the same function as a letter of credit but with some differences.
🏦 guarantee generally used in domestic transactions.
🏦 guarantee is beneficial when contractual obligations are not fulfilled by the other seller party.
🏦 guarantee is used in infrastructure and real estate projects to reduce risk level.
⤵Letter of Credit V/s 🎎Bank Gurantee
Basis🎟
⤵Letter of CreditBank Guarantee-DefinitionA letter of credit is an obligation by the bank to the seller if the criteria met, the bank will make payment.

🎎In bank guarantee, if the opposing party doesn’t fulfil contractual obligations the Bank will make payment.
Boundary🎟
⤵It is used internationally.
🎎It is used domestically.
Protection🎟
⤵It protects both parties but favours exporter.
🎎It also protects both but favours buyer.
Industry🎟
⤵It is used by merchants.
🎎It is used by real estate and infrastructure developer.
L/Cs are frequently used in international transactions compared with bank guarantees. When comparing the two instruments, the market for bank guarantees is much larger than that for L/Cs.